Date: 20070810
Docket: T-1548-06
Citation: 2007 FC 837
Ottawa, Ontario, August 10,
2007
PRESENT: The Honourable Madam Justice Snider
BETWEEN:
LES LABORATOIRES SERVIER,
ADIR, ORIL INDUSTRIES,
SERVIER CANADA INC.,
SERVIER LABORATORIES (AUSTRALIA) PTY LTD
and SERVIER LABORATORIES LIMITED
Plaintiffs
(Defendants to the Counterclaim)
and
APOTEX INC.
and
APOTEX PHARMACHEM INC.
Defendants
(Plaintiffs by Counterclaim)
REASONS FOR ORDER AND ORDER
1. Introduction
[1] The Plaintiffs
(collectively referred to as Servier or the Plaintiffs) have commenced an
action against the Defendants (collectively Apotex or the Defendants), claiming
that the Defendants are infringing certain claims of Canadian patent No.
1,341,196 (the 196 Patent). In its Second Amended Statement of Defence and
Counterclaim (Defence and Counterclaim), the Defendants raise a number of
grounds upon which they assert that the 196 Patent is invalid. The ground of
interest in this motion is that of “inventorship”. In brief, the Defendants allege
that the first and true inventors of the 196 Patent are those named in Patent
Application 388,336 (the 336 Application) filed by Schering Corporation
(Schering) and not those named as inventors of the 196 Patent.
[2] In this motion, the
Plaintiffs seek to strike those paragraphs and portions of the Defence and
Counterclaim dealing with the issue of “inventorship”. Specifically, the Plaintiffs seek to
strike:
(a) the
statement “in order to themselves “create” the inventorship of the
subject-matter of the Agreement” in paragraph 26 of the Defence and
Counterclaim;
(b) paragraphs 48 to 54
of the Defence and Counterclaim;
(c) paragraph 65 of the
Defence and Counterclaim;
(d) paragraph 68 of the
Defence and Counterclaim; and
(e) the
statement “and allocate among themselves overlapping claims to a number of ACE
inhibitor compounds that did not reflect the actual inventorship of those
compounds or their constituent classes, or the determinations of inventorship
made by the Commissioner of Patents in 1996” in paragraph 71 of the Defence and
Counterclaim.
2. Issues
[3] The
overarching issue raised by this motion is whether the Plaintiffs have
satisfied the requirements of Rule 221(1) of the Federal Courts Rules, S.O.R./98-106
for the striking out of the impugned portions of the Defence and Counterclaim.
That provision states that:
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221. (1) On motion,
the Court may, at any time, order that a pleading, or anything contained
therein, be struck out, with or without leave to amend, on the ground that it
(a) discloses no reasonable
cause of action or defence, as the case may be,
(b) is immaterial or redundant,
(c) is scandalous, frivolous or
vexatious,
(d) may prejudice or delay the
fair trial of the action,
(e) constitutes a departure from
a previous pleading, or
(f) is otherwise an abuse of the
process of the Court,
and may order the action be dismissed
or judgment entered accordingly.
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221. (1) À tout
moment, la Cour peut, sur requête, ordonner la radiation de tout ou partie
d’un acte de procédure, avec ou sans autorisation de le modifier, au motif,
selon le cas:
a) qu’il
ne révèle aucune cause d’action ou de défense valable;
b) qu’il
n’est pas pertinent ou qu’il est redondant;
c) qu’il
est scandaleux, frivole ou vexatoire;
d) qu’il
risque de nuire à l’instruction équitable de l’action ou de la retarder;
e) qu’il
diverge d’un acte de procédure antérieur;
f) qu’il
constitue autrement un abus de procédure.
Elle peut aussi
ordonner que l’action soit rejetée ou qu’un jugement soit enregistré en
conséquence.
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[4] More
specifically, in the context of this motion, the questions that arise are as
follows:
1. Do the
Defendants’ allegations regarding the issue of “inventorship” fail to disclose
a reasonable cause of action or defence due to the operation of s. 61(1)(b) of
the pre-October 1, 1989 Patent Act, R.S.C. 1985, c. P-4 (Old Act)?
2. Are the
Defendants’ allegations regarding the issue of “inventorship” an attempt to
re-litigate or a collateral attack on matters which have already been decided
by the Court thus constituting an abuse of process of the Court?
3. Would the
Defendants’ allegations regarding the issue of “inventorship” prejudice or
delay the fair trial of the Plaintiffs’ action against the Defendants.
[5] In oral
submissions before me, the Plaintiffs did not assertively pursue the question
of possible delay. Accordingly, I have not considered this issue further.
3. Background
[6] To set the context for
these reasons, a brief overview may be helpful.
[7] Generally speaking, the
196 Patent claims the compound perindopril, which is sold in Canada and elsewhere under the
registered trademark name of COVERSYL.
[8] The process leading to
the issue of the 196 Patent began on October 1, 1981 when one of the Plaintiffs
in this action, Adir, filed Application 387,093 (the 093 Application) in Canada. The 093 Application
named Michel Vincent, George Remond and Michel Laubie, as Inventors. In
separate applications, two other claimants also applied for the issuance of
patents covering certain compounds. As provided for in the Old Act,
certain of the claims in the 093 Application were placed into conflict with
claims in other applications. In table form, the specifics of the applications
and the claims in conflict are as follows:
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Applicant
|
Application
No.
|
Date of
Application
|
Claims in
Conflict
|
|
Adir
|
387,093 (the
093 Application)
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October 1,
1981
|
C19, C25 to
C28, C33 and C34, C39 and C40
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|
Schering
|
388,336 (the
336 Application)
|
October 20,
1981
|
C19, C39 and
C40
|
|
Hoechst
Aktiengesellschaft (Hoechst)
|
384,787 (the
787 Application)
|
August 28,
1981
|
C19, C25 to
C28
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Hoechst
|
418,453 (the
453 Application)
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December 23,
1982
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C33 and C34
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[9] In four decisions dated
August 8, 1996, the Commissioner of Patents made determinations related to
inventorship, pursuant to s. 43(7) of the Old Act. In sum, the effect of
his decisions was that certain of the claims were awarded to Adir, and others
to each of Hoechst and Schering. Of particular relevance, the Commissioner
awarded the subject matter of the conflict claims C19, C39 and C40 to Schering
and not to Adir. In table form, the conclusions of the Commissioner are as
follows:
|
Claim No.
|
First
Invention Date
|
Claim
Awarded To
|
Claims
Refused To
|
|
C19
|
August 8, 1980
|
Schering (336
App’n)
|
Adir (093
App’n), Hoechst (787 App’n)
|
|
C25, C27
|
May 8, 1981
|
Hoechst (787
App’n)
|
Adir (093
App’n)
|
|
C26, C28
|
October 2,
1980
|
Adir (093
App’n)
|
Hoechst (787
App’n)
|
|
C33
|
October 8,
1981
|
Hoechst (453
App’n)
|
Adir (093
App’n)
|
|
C34
|
December 29,
1981
|
Hoechst (453
App’n)
|
Adir (093
App’n)
|
|
C39, C40
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August 8, 1980
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Schering (336 App’n)
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Adir (093 App’n)
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[10] This was not the end of the matter. In
accordance with s. 43(8) of the Old Act, six proceedings were commenced
by way of actions in the Federal Court for the determination of the parties’
respective rights in relation to the subject matter of the conflict claims. All
of the proceedings were consolidated pursuant to the Order of Justice Joyal
dated May 27, 1997 (Court File No. T-228-97). Subsequent to completion of
discoveries in the consolidated actions, an Order on consent was issued by
Justice Nadon on December 12, 2000. That Order provided for an allocation of
the claims of the three Applications. Some claims were awarded to Adir, others
to Aventis Pharma Deutschland (Aventis, successor to Hoechst) and others to
Schering. The result, for Adir, was the issuance of the 196 Patent. Relevant to
this action by the Plaintiffs, the claims awarded to Adir, pursuant to s. 43(8)
of the Old Act, included claims 1, 2, 3, and 5 which are asserted
against the Defendants as having been infringed.
4. Relevant Statutory Framework under the Old
Act
[11] The
application leading to the patent in this proceeding was filed in Canada on October,
1, 1981. According to s. 78.1 of the present Patent Act, R.S.C.
1985, c. P-4 as amended, patent applications filed before October 1, 1989 are
to be dealt with under the provisions of the Patent Act as they read
immediately before that date. That is, the subject matter of the action by the
parties is governed by the Old Act.
[12] Of critical
importance to the issues before me, the overall scheme under the Old Act
is one of “first to invent”. By contrast, the scheme under the current Patent
Act can be described as a “first to file”. This concept is embodied in s.
27(1) of the Old Act:
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Subject to this section, any inventor
or legal representative of an inventor of an invention that was
(a) not known or used by any other person
before he invented it,
(b) not
described in any patent or in any publication printed in Canada or
in any other country more than two years before presentation of the
petition hereunder mentioned, and
(c) not
in public use or on sale in Canada for more than two years prior to
his application in Canada,
may, on presentation to the
Commissioner of a petition setting out the facts, in this Act termed the
filing of the application, and on compliance with all other requirements of
this Act, obtain a patent granting to him an exclusive property in the
invention.
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Sous réserve des autres dispositions du
présent article, l’auteur de toute invention ou le représentant légal de
l’auteur d’une invention peut, sur présentation au commissaire d’une pétition
exposant les faits, appelée dans la présente loi « le dépôt de la
demande », et en se conformant à toutes les autres prescriptions de la
présente loi, obtenir un brevet qui lui accorde l’exclusive propriété d’une
invention qui n’était pas :
a) connue ou utilisée par une autre
personne avant que lui-même l’ait faite;
b) décrite dans un brevet ou dans une
publication imprimée au Canada ou dans tout autre pays plus de deux ans avant
la présentation de la pétition ci-après mentionnée;
c) en usage public ou en vente au
Canada plus de deux ans avant le dépôt de sa demande au Canada.
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[13] Recognizing that more
than one person might claim inventorship to similar or overlapping subject
matters, Parliament provided means for identifying and resolving such a
conflict. To begin, s. 43(1) of the Old Act defines when a conflict
exists:
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Conflict between two or more pending
applications exists
(a) when each of them contains one or more
claims defining substantially the same invention; or
(b) when one or more claims
of one application describe the invention disclosed in one of the other
applications.
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Se
produit un conflit entre deux ou plusieurs demandes pendantes dans les cas
suivants:
a)
chacune
d’elles contient une ou plusieurs revendications qui définissent
substantiellement la même invention;
b)
une ou plusieurs revendications d’une même demande décrivent l’invention
divulguée dans l’autre ou les autres demandes.
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[14] The balance
of s. 43 sets out the procedures to be followed in declaring and dealing with
conflicts. Of particular significance in this motion are two provisions. The
first is s. 43(7) which provides for the issuance of a decision by the
Commissioner in which he determines “which of the applicants is the prior
inventor to whom he will allow the claims in conflict”. The second is s. 43(8)
which permits a party to a conflict to commence proceedings in the Federal
Court for a “determination of [the] respective rights” of the parties to the
conflict. In practical terms, the proceedings under s. 43(8) are commenced by
way of an action, with full discovery and other procedures allowed by the Federal
Courts Rules. When s. 43(8) is engaged, the Commissioner’s decision is
suspended and no patents may issue until the Federal Court determines that:
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(a)
there is
in fact no conflict between the claims in question;
(b)
none of
the applicants is entitled to the issue of a patent containing the claims in
conflict as applied for by him;
(c)
a patent
or patents, including substitute claims approved by the Court, may issue to
one or more of the applicants; or
(d)
one of
the applicants is entitled as against the others to the issue of a patent
including the claims in conflict as applied for by him.
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a)
de fait,
il n’existe aucun conflit entre les revendications en question;
b)
aucun
des demandeurs n’a droit à la délivrance d’un brevet contenant les
revendications concurrentes, selon la demande qu’il en a faite;
c)
il peut
être délivré, à l’un ou à plusieurs des demandeurs, un ou des brevets
contenant des revendications substituées, approuvées par le tribunal;
d)
l’un des
demandeurs a droit à l’encontre des autres, à la délivrance d’un brevet
comprenant les revendications concurrentes, selon la demande qu’il en a
faite.
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[15] While s.
27(1) accords the right to a patent to the first inventor, the Old Act
also contemplates that legal proceedings may be brought with respect to the
validity of patents (see Old Act, starting at s. 53). However, when the
validity of a patent is being challenged on the question of inventorship, s.
61(1) is a limiting or qualifying provision:
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No patent or claim in a patent shall be
declared invalid or void on the ground that, before the invention therein
defined was made by the inventor by whom the patent was applied for, it had
already been known or used by some other person, unless it is established
that
(a) that other person had, before the date of the application for the
patent, disclosed or used the invention in such manner that it had become
available to the public;
(b) that other person had, before the issue of the patent, made an
application for patent in Canada on which conflict proceedings should have
been directed; or
(c) that other person had at any time made an application in Canada
which, by virtue of section 28, had the same force and effect as if it had
been filed in Canada before
the issue of the patent and on which conflict proceedings should properly
have been directed had it been so filed.
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Aucun brevet ou aucune revendication
dans un brevet ne peut être déclaré invalide ou nul pour la raison que
l’invention qui y est décrite était déjà connue ou exploitée par une autre
personne avant d’être faite par l’inventeur qui en a demandé le brevet, à
moins qu’il ne soit établi que, selon le cas :
a)
cette
autre personne avait, avant la date de la demande du brevet, divulgué ou
exploité l’invention de telle manière qu’elle était devenue accessible au
public;
b)
cette
autre personne avait, avant la délivrance du brevet, fait une demande pour
obtenir au Canada un brevet qui aurait dû donner lieu à des procédures en cas
de conflit;
c)
cette
autre personne avait à quelque époque fait au Canada une demande ayant, en
vertu de l’article 28, la même force et le même effet que si elle avait été
enregistrée au Canada avant la délivrance du brevet et pour laquelle des
procédures en cas de conflit auraient dû être régulièrement prises si elle
avait été ainsi enregistrée.
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[16] No arguments were
raised as to s. 61(a) or (c) of the Old Act and accordingly my analysis
will be limited to s. 61(1)(b).
5. Issue #1: Failure to
Disclose a Reasonable Cause of Action or Defence
[17] The first
argument of the Plaintiffs is that the impugned provisions in the Defence and
Counterclaim should be struck as they do not disclose a reasonable cause of
action. In brief, they submit that the Defendants cannot satisfy the statutory
elements necessary to attack inventorship, as provided for in s. 61(1)(b) of
the Old Act. Under the Plaintiffs’ interpretation of this provision, the
inventorship of the subject matter of a patent can only be challenged where
there was both prior knowledge or use by some other person and a missed
conflict. In the Plaintiffs’ view, s. 61(1)(b) applies to prohibit a claim of
invalidity based on inventorship where, as in this case, a conflict was, in
fact, declared.
[18] The test in Canada to strike
out pleadings is whether it is plain and obvious the claim discloses no
reasonable cause of action or defence (Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959).
There is no disagreement on this test or that the Plaintiffs bear the burden on
this motion to strike.
[19] On the question of
whether the impugned portions of the Defence and Counterclaim disclose a
reasonable cause of action, the Defendants provide arguments that fall into two
categories:
1. procedural
grounds, on the basis that:
(a) the Plaintiffs’ motion to strike the
inventorship allegations on the basis of failing to meet s. 61(1) is improper
as the Plaintiffs have failed to plead all necessary material facts and law
relating to s. 61(1); or
(b) the Plaintiffs should not be permitted to
bring a second motion to strike;
2. substantive grounds,
on the basis that:
(a) the
legal question of the statutory interpretation of s. 61(1)(b) is a contentious
legal issue that ought to be left to trial (Apotex Inc. v. Eli Lilly and Co.
(2001), 13 C.P.R. (4th) 78); or
(b)
the Plaintiffs have misinterpreted s. 61(1)(b) of the Old Act.
[20] I will consider the
procedural arguments first.
5.1 Is the s. 61(1)
motion improper for failure to plead all material facts and law?
[21] The
Defendants argue that Rule 183 of the Federal Court Rules requires the
Plaintiffs (as defendants to the Defendants’ counterclaim) to plead all
affirmative defences or facts that might take the Defendants by surprise. They
submit that, having failed to mention s. 61(1) in their pleadings, the
Plaintiffs’ motion to strike on the basis of the section is improper. In
support they refer to Canada v. Transworld Shipping Ltd., [1976] 1 F.C. 159
(F.C.A.); Kibale
v. Canada (1990),
123 N.R.153 (F.C.A.); International Water-Guard Industries Inc. v.
Bombardier Inc., [2007]
F.C.J. No. 372 (Proth.) (QL) and Valentino Gennarini SRL v. Andromeda
Navigation Inc. (2003), 232 F.T.R. 256. I do not agree with the
Defendants that the pleadings of the Plaintiffs are deficient.
[22] I begin by a
review of the Plaintiffs’ Third Amended Statement of Claim. Many paragraphs of
the pleadings provide material facts related to the issue. Beginning with the
Third Amended Statement of Claim, paragraphs 7 to 9, set out, in clear terms,
that the Plaintiffs have a valid patent that arose out of conflict proceedings.
[23] More explicit
pleadings are contained in numerous paragraphs in the Plaintiffs’ Second
Amended Reply and Defence to Counterclaim; specifically, paragraphs 16, 19, 20,
32, 36, 39, 40, 44 and 49. It is true that there is no precise reference to s.
61(1)(b). Nevertheless, when the pleadings are read as a whole, the elements of
a s. 61(1)(b) defence are included. The Plaintiffs have clearly pleaded that
the 196 Patent was not granted in the face of patent applications that were not
placed into conflict. The only remaining question is whether the Plaintiffs’
failure to explicitly plead s. 61(1)(b) is a deficiency that precludes them
from now raising the statutory provision. I do not think, in this particular
case, there was a requirement to include a specific reference to s. 61(1)(b).
[24] The Federal
Court Rules provide that a party must plead the material facts on
which it relies in its pleadings (Rule 174) and that a party may raise a
point of law in its pleadings (Rule 175).
[25] I have
reviewed the case law cited by the Defendants in support of their procedural
argument and find it to be of little assistance. On a general note, none of the
jurisprudence cited by the Defendants specifically involves Rule 183 of the Federal
Court Rules or a claim relating to patent infringement or validity.
[26] In
Transworld Shipping Ltd., above, the Federal Court of Appeal held that there may
be special circumstances where a defendant must plead statutory provisions. In
the context of awarding damages for breach of contract, the court held at page
170:
In
my view, justice requires that any defence based on special statutory
provisions must be pleaded, particularly if it is based on specific facts,
so that the opposite party may have discovery with regard to such facts and
prepare to adduce evidence with regard thereto. This is all the more so when
such defence is based on an indoor housekeeping rule applicable to
government administration and is being used by the Government as against an
outside claimant. To permit an amendment on appeal to raise a defence based on
facts not so pleaded and litigated at trial would open the door to
possibilities of rank injustice (emphasis added).
[27] It appears
that, in that case, the opposite party pleaded neither the law nor the specific
facts on which they were relying. This is not the situation that I am faced
with in this motion.
[28] In Kibale,
above, the Court of Appeal held that a statute of limitations defence must be
specifically pleaded and cannot be first raised in a preliminary motion to
strike. Once again, this is a much different situation from that which I am
faced with.
[29] In International
Water-Guard, above, the Prothonotary analogized a statute of limitation defence
to the defence of estoppel, and subsequently held that a defence of estoppel,
as a defence grounded in equity, must be specifically plead by a defendant.
This case is not relevant as the Plaintiffs’ motion to strike on the basis of
s. 61(1) is grounded in statute and not equity.
[30] Valentino, above, merely
confirms the rule that a defendant is required to plead all material facts. In
the case, the defendant sought to introduce evidence of an agency relationship
between itself and a third party having never included any mention or even
implied an agency relationship in its pleadings. The court held that a defendant
must plead the defence that it was acting as an agent for a third party.
[31] In conclusion
on this procedural argument, I am satisfied that the s. 61(1)(b) grounds were
sufficiently pleaded by the Plaintiffs. A reasonable reading of the pleadings discloses
the material facts upon which the s. 61(1)(b) argument is based. The s.
61(1)(b) argument is a legal consequence of the material facts pleaded and did
not need to be specifically pleaded. The Defendants ought not to have been
surprised by the arguments now being made by the Plaintiffs in relation to s.
61(1)(b) of the Old Act.
5.2 Should this motion be dismissed on the basis
that the Plaintiffs have already had an opportunity to bring a motion to
strike?
[32] The Defendants correctly point out that the
Plaintiffs have known that inventorship was an issue in this action since
before December 2006. Although, on February 26, 2007, the Plaintiffs served and
filed a Notice of Motion to strike certain of the pleadings, those pleading
related to inventorship were not included, except in respect of paragraph 26.
Nor did the Plaintiffs refer to the s. 61(1)(b) argument. That motion was never
perfected as the parties reached agreement on a number of issues and the motion
was withdrawn.
[33] The Defendants submit that, absent special
circumstances, a party is only entitled to one opportunity to attack the
opposite party’s pleadings (Speedo Knitting Mills Pty. Ltd. v. Christina
Canada Inc. (1985), 3 C.P.R. (3d) 360 (F.C.T.D.)).
[34] I fail to see how a Notice of Motion that
was settled by the parties and was never adjudicated can constitute a bar to
bringing this motion. I do not read the Speedo case or others referred
to by the Defendants as authority for that proposition. Further, Rule 221
explicitly provides that a motion to strike can be brought at any time.
[35] A further comment is, however, warranted on
the timing of this motion. Given that the Plaintiffs have known about the issue
of inventorship for considerable time, I find it odd that this motion was not
brought sooner. While I do not believe that the timing of this motion prevents
it from being heard, it will go to the question of costs, as discussed later.
[36] Having concluded that there are no
procedural barriers to the consideration of this motion to strike, I turn to
the substantive question before me – the interpretation of s. 61(1)(b).
5.3 Can matter of statutory interpretation be
dealt with in a motion to strike?
[37] I begin by addressing one preliminary
argument of the Defendants. There is no question that the interpretation of s.
61(1)(b) is the subject of disagreement. Because there is disagreement, the
proper interpretation is contentious, as between the Plaintiffs and the
Defendants. The Defendants rely on the decision of Justice Blanchard in Eli
Lilly, above, to argue that the Court should not strike the impugned
provisions because there are contentious matters of statutory interpretation at
stake.
[38] The problem with this assertion is that Eli
Lilly does not stand for the proposition that, whenever there is a dispute
as to interpretation, the issue should go to trial. At issue in Eli Lilly
was s. 8 of the Patented Medicines (Notice of Compliance) Regulations, S.O.R./93-133,
a notoriously complex provision that is the subject of considerable litigation
by a number of parties. The provision is not just contentious; it was described
by Justice Hugessen as “particularly obscure in its meaning” (Merck Frosst
Canada Inc. v. Canada (Minister of National Health and Welfare) (1994), 55
C.P.R. (3d) 302 at 316 (F.C.A.)) and by Justice Blanchard (Eli Lilly,
above, at para. 13), as “a complex matter of statutory interpretation” that is
“better left for argument at trial where proper evidence may be adduced and
should not be disposed of by a motions judge in a preliminary proceeding”.
[39] The fact that an issue is contentious does
not necessarily make it complex. Before me, I have a single provision with an
obvious literal meaning. I do not see that the situation faced by Justice
Blanchard can, in any way, be compared to that before me. Were I to accept the
Defendants’ view of statutory interpretation, such issues could never be
resolved by a preliminary motion to strike.
5.4 Does s. 61(1)(b) bar the Defendants’
allegation of invalidity on the basis of prior inventorship?
[40] I will now address the
question of the interpretation of s. 61(1)(b). Does s. 61(1)(b) mean that, on
the facts as pleaded, inventorship cannot be raised as a ground of invalidity?
[41] Inventorship, as discussed
above, is the key to the issuance of patents under the Old Act; the
first inventor is entitled to the patent. Sections 61(1) and 27(1), read
together, indicate the manner in which a patent can be held to be invalid on
the grounds of prior inventorship. As stated in s. 61(1)(b), no patent will be
declared invalid on the grounds of prior inventorship by some other person
unless the challenging party can establish that the other person had, before
the issue of the patent holder’s patent, made an application for patent in
Canada on which conflict proceedings should have been directed.
[42] The
Plaintiffs and Defendants differ on the interpretation of the phrase “on which
conflict proceedings should have been directed”. The Plaintiffs assert that s.
61(1)(b) applies to their situation because, not only should conflict
proceedings have been directed, they actually were so directed. In
effect, they argue that, under s. 61(1)(b), an attack on the basis of prior
inventorship is not permitted where, as here, another person’s invention was
known and put into conflict proceedings. That is, s. 61(1)(b) applies only when
there has been a “missed conflict”. This appears to be the literal
interpretation of s. 61(1)(b).
[43]
The
Defendants argue that the Plaintiffs are reading language into s. 61(1)(b)
that, in effect, limits the application of the provision. In their view, this violates
a basic principle of statutory interpretation (Ruth Sullivan, Sullivan and
Driedger on the Construction of Statutes (4th ed.) (Toronto: Butterworths,
2002), at 131). Thus, they assert, the provision means simply that the
circumstances which ought to have given rise to conflict proceedings pursuant
to s. 43(1) of the Old Act must have existed (in simple terms, similar
or overlapping claims). In their view, whether the conflict proceedings
actually occurred is immaterial. On this interpretation, any of the patents
arising from the 093, 336, 787 and 453 Applications would potentially satisfy
the requirement of s. 61(1)(b), provided that the challenging party could
demonstrate that there was an earlier disclosure of the invention to the
public.
[44] As acknowledged by the Plaintiffs, there
has been little jurisprudence dealing with s. 61(1)(b). However, three cases
were referred to, all of which, in my view, provide an interpretation that is
consistent with that asserted by the Plaintiffs.
[45] An example of the use of s. 61(1)(b) of the
Old Act is set out in AT & T Technologies, Inc. v. Mitel Corp.
(1989), 26 C.P.R. (3d) 238 (F.C.T.D.), where the validity of a patent was in
issue. According to the defendant, the AT & T patent was invalid because
the named inventors “were not the first to invent and there existed a patent
application in the patent office at the time the AT & T patent was filed,
with which it should have been put in conflict” (AT&T, above at page
265). As discussed by Justice Reed in that case, s. 27(1) of the Old Act
accords the first inventor the right to the grant of a patent.
[46] However, Justice Reed also acknowledged the
qualification of the “first inventorship” requirement by s. 61(1)(b). After a
careful review of the evidence before her, which included two patent
applications, Justice Reed concluded as follows, at page 272:
There
is no doubt that the two patent applications should have been put in conflict.
.
. .
All
that must be proved is that there was a prior invention of the process, and
device, before the plaintiff's invention date and that there were patent
applications which should have been put in conflict. This has been proven. The
plaintiff's patent is therefore clearly invalid.
[47] As I read this holding, the conclusion of
invalidity was made for two reasons: (1) there was a prior invention; and (2)
there were patent applications that should have been put in conflict. Both
requirements had to be met. Had the defendant been unable to satisfy the Court
that there were patent applications that should have been put in conflict, the
defendant would not have been able to meet the test set out in s. 61(1)(b) and
the patent would not have been declared invalid on the ground of prior
inventorship. In sum, Justice Reed gave an interpretation to s. 61(1)(b) that
is consistent with that proposed by the Plaintiffs in this motion.
[48] This interpretation of s. 61(1)(b) was adopted
by Justice Mactavish in Aventis Pharma Inc. v. Apotex Inc. (2006), 43
C.P.R. (4th) 161 at paras. 341-343 (F.C.), aff’d (2006), 46 C.P.R. (4th) 401
(F.C.A.), leave to appeal to S.C.C. refused [2006] S.C.C.A. No. 136, where she
was considering an argument of patent invalidity by the respondent based on s.
61(1)(b) of the Old Act. In Justice Mactavish’s view, the respondent, to
be successful, had to establish that “there was both prior knowledge or use by
Hoeschst, and a missed conflict” (Emphasis in original). However, it
should be noted that, as Justice Mactavish concluded that the respondent had
failed to establish that there was prior knowledge or use by Hoechst, she did
not need to deal with the issue of whether, in that case, there was a missed
conflict (Aventis Pharma, above at para. 349). However, once again, we
have a judicial interpretation of s. 61(1)(b) that accords with that proposed
by the Plaintiffs.
[49] The most recent case in which s. 61(1)(b)
has been considered is Pfizer Canada Inc. v. Canada (Minister of Health) and
Apotex Inc., [2007] F.C.J. No. 767 (QL). The issue before the Court of
Appeal was whether the trial judge had erred in applying the wrong test for
anticipation. In response, Justice Nadon, speaking for the Court of Appeal,
endorsed the written submissions of Pfizer, the respondent to the appeal, at
para. 138:
It
appears from paragraphs 85 and 86 of Heneghan J.'s Reasons that she did apply
the anticipation by prior publication test. In this respect, I find
particularly convincing paragraph 27 of Pfizer's Reply Memorandum of Fact and
Law which states:
27. Apotex
argues that Justice Heneghan erred by failing to consider s. 27(1)(a) of the
Patent Act, which requires a patent to be "known or used" by any
other person before the inventor invented it. This was not an error. Section
61(1) prevents a patent from being invalidated on the basis that it was
"known or used" unless it was "disclosed or used ... in such
manner that it had become available to the public" or if it was the subject
of an application for a patent in Canada on which "conflict proceedings
should have been directed." Neither of these conditions are met in this
case. There is no evidence that the Hoechst patent application was known to the
public. Moreover, this is not a case in which "conflict proceedings should
have been directed". Rather, conflict proceedings were
directed, did occur, and the patent ultimately issued to Warner
Lamber (Emphasis in original).
[50] Justice Nadon continued his analysis by
pointing out that Apotex had not filed into evidence a copy of the Hoechst
Patent. Thus, it was impossible to discern the filing or issuance date of that
patent. Accordingly, Justice Nadon did not have to directly assess whether
conflict proceedings that resulted in a settlement met the requirement of s.
61(1)(b). Nevertheless, I infer from his endorsement of the entire submission
of Pfizer that he did not disagree with this proposition.
[51] The Pfizer case is particularly
instructive because it involves a situation that is very similar to that before
me. The applicants in that case relied on two patents. One of those patents
(the 330 Patent) was placed in conflict with a patent owned by a German
company. The Commissioner of Patents determined that the German company was the
first to invent and awarded the patent to that company. In 1999, a consent
judgment was entered whereby the 330 Patent was issued only to the applicants.
[52] Thus, in sum, a consideration of the case
law supports the position of the Plaintiffs.
[53] Given that
the relevant cases did not directly rule on the issue before me, I turn to a
fresh consideration of the meaning of s. 61(1)(b). It is a well-established
principle of statutory interpretation that words of a statute are to be read in
their entire context in their grammatical and ordinary sense harmoniously with
the scheme of the Act, the object of the Act, and the intention of Parliament
(Elmer Driedger, Driedger on the Construction of Statutes (2nd
ed.) (Toronto: Butterworths, 1983) at para. 21, as cited in Rizzo & Rizzo
Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at para. 21). Keeping this guidance in
mind, the place to begin is with an examination of the context of conflict
proceedings under the Old Act.
[54] A number of
cases have considered the role of conflict proceedings. In Texaco Development Corp.
v. Schlumberger Ltd.,
[1967]
1 Ex. C.R. 459 at 233, it was held that s. 45 of an earlier Patent Act
(s. 43 under the Old Act) allowed an interruption in the processing of
an application for a patent “for the sole purpose of deciding which of two
applicants is the inventor.” Justice Jackett was careful, however, to state
that all other objections to the granting of a patent “should be dealt with in
the ordinary course of events”. In other words, he acknowledged that, because
of the operation of the statute, inventorship is carved out for special
treatment.
[55] Nekoosa Packaging Corp.
v. Amca International Ltd. (1989), 27 C.P.R. (3d) 153 at 157-8 (F.C.T.D.), aff’d (1994) 56 C.P.R.
(3d) 470 (F.C.A.) is also relevant on this point and helpful as Justice Cullen
spent considerable time in summarizing the state of the law at that time. The
case involved a patent infringement action which had been preceded by a
conflict action. The earlier conflict action had resulted in a final
determination by the Federal Court of Appeal. The court in the subsequent
patent infringement action held that a determination by the court made during
conflict proceedings does not give rise to an argument of estoppel in later proceedings
respecting the validity of a patent. This was because conflict actions are
directed to the issue of priority and do not put an imprimatur on the validity
of claims in conflict beyond directing the Commissioner to issue a patent
containing such claims. In short, the plaintiffs were not prevented from
bringing claims of invalidity on the grounds of obviousness. It should be noted
that, in the case before Justice Cullen, prior inventorship was not an alleged
ground of invalidity. Thus, this case is a good example of a consistent line of
jurisprudence that states that other grounds of invalidity may be raised after
the conclusion of conflict proceedings. The reasoning is apparent. Conflict
proceedings deal only with inventorship; thus, no other possible grounds
of invalidity have been considered during such conflict proceedings.
[56] The case law on the
interpretation of s. 61(1) of the Old Act appears, at first blush, to be
at odds with the jurisprudence as to the scope of conflict proceedings. On the
one hand, conflict proceedings have been generally held not to decide the issue
of the validity of the patent. On the other hand, those validity claims
relating to inventorship of the patent, are precluded from being raised by s.
61(1) if there is no “missed conflict”. If both lines of authority are
accepted, the result is to make conflict decisions by the Commissioner of
Patents, or, if appealed, by the Federal Court, while not necessarily
determinative of inventorship (as held in Nekooska
Packaging Corp.),
unimpeachable on that issue. In my view, such an interpretation of s. 61(1) is
logical and should be adopted.
[57] In any interpretation of
patent legislation, and therefore the patent system, it is helpful to recall
Justice Binnie’s comments in Free World Trust v. Électro Santé Inc., [2000]
2 S.C.R. 1024, at paras. 41-43, that, “The scope of patent protection must not
only be fair, it must be reasonably predictable” and that:
The patent
owner, competitors, potential infringers and the public generally are thus
entitled to clear and definite rules as to the extent of the monopoly
conferred.
[58] This is particularly true
under the Old Act where the defining concept is one of inventorship. The
intent of the legislative scheme is to provide a means for identifying the true
first inventors and dealing with conflicts that may arise prior to the issuance
of the patent. Where a patent has issued pursuant to this process, Parliament
has provided that it is protected from further attacks on the question of inventorship,
except in the circumstances contemplated by the Old Act:
specifically, s. 61(1)(b).
[59] I further note that none of
the jurisprudence dealing with invalidity allegations after conflict
proceedings considered the special circumstances of inventorship. Thus, the
cases do not directly conflict in any way with the interpretation of s.
61(1)(b) put forward by the Plaintiffs.
[60] Finally, I highlight a
concern with the Defendants’ interpretation of the provision. The problem with
the Defendants’ interpretation of the words “should have been directed” is that
it renders s. 61(1)(b) essentially meaningless. It is also a principle of
statutory interpretation that Parliament has intended the words in a statute to
have meaning. On the Defendants’ interpretation, the phrase would capture not
only missed conflicts, but every application where conflict proceedings were
directed. A declared conflict, regardless of how it was resolved, would become
irrelevant thereby removing from the operation of the Old Act any
concept of certainty for the issued patent. In effect, the Defendants are also
reading words into the provision; in their view, the provision should read “an
application … on which conflict proceedings should have been directed, whether
or not they were so directed”. In the alternative, they are reading the
provision as “an application … on which conflict proceedings could have
been directed”. In either case, the Defendants are providing an interpretation
that cannot be read harmoniously with the scheme of the Old Act.
5.5
Conclusion on this issue
[61] An interpretation of s. 61(1)(b)
as suggested by the Plaintiffs is consistent with the principles identified in Free
World Trust, consistent with both the s. 61(1)(b) and conflict proceeding
lines of authority, and helps, not hinders, the patent system embodied in the Old
Act. On this purposive interpretation of the statutory provisions of the Old
Act, it is entirely consistent to separate out the concept of inventorship
for “special treatment”. By preventing a finding of invalidity where conflict
proceedings have been directed, the foundation concept of the Old Act –
first inventorship – is protected. On the other hand, no special provisions are
contained within the Old Act that would protect a patentee from other
grounds of invalidity attacks. Accordingly, those other grounds may be raised
in the usual course. In my view, this is the result that Parliament intended.
[62] Furthermore, it should be
emphasized again that such an interpretation would be limited to precluding
parties where there is no “missed conflict” from advancing an allegation of
prior inventorship. Other grounds for questioning the validity of a patent are
unaffected.
[63] One final argument that was
made by the Defendants on the existence of a reasonable cause of action is that
the inventorship allegations are linked to the conspiracy allegations. I do not
accept this argument. As I read the pleadings of the Defendants, the alleged
conspiracy as between Adir and the other corporate applicants, Hoechst and
Schering, is not a conspiracy of the inventors. Conspiracy, while it may have
arisen from the inventorship question, is a separate claim. The Defendants have
given me no concrete examples of how the absence of the impugned provisions will
prevent their pursuit of the conspiracy allegations.
[64] On the facts before me, I am
satisfied that the Defendants cannot meet the requirements of s. 61(1)(b) of
the Old Act. It follows that it is plain and obvious that the impugned
provisions of the Defence and Counterclaim disclose no reasonable cause of
action and should be struck. This is a sufficient basis upon which to allow the
motion. However, for completeness, I will also consider the alleged ground of
abuse of process.
6. Issue #2:
Abuse of Process
[65] A ground for the striking of pleadings is
that allowing the pleadings to proceed would result in an abuse of process
(Rule 221(1)(f)). In this case, the Plaintiffs assert that the issue of
inventorship was finally determined by the Order of Justice Nadon. Thus, they
assert, allowing a trial to proceed on the issue of inventorship of the 196
Patent would be, in effect, a re-litigation of the same issues dealt with in
that Order or a collateral attack on that Order. Either of these would constitute,
in their view, an abuse of process.
[66] The abuse of process doctrine was
considered in the recent Supreme Court of Canada case Toronto (City) v. C.U.P.E., Local 79,
[2003] 3 S.C.R. 77 (C.U.P.E.). Writing for the majority of the court, Justice Arbour
highlighted the following general principles of the doctrine:
- Judges have an
inherent and residual discretion to prevent an abuse of the court’s
process (C.U.P.E., above at
para. 35).
- The doctrine of
abuse of process can be used in a variety of legal contexts, and has been
used to preclude re-litigation where the strict requirements of issue
estoppel are not met but where allowing the litigation to proceed would
nonetheless violate such principles as judicial economy, consistency,
finality and the integrity of the administration of justice (C.U.P.E., above at paras.
36-37).
[67] In the specific context of re-litigation
Justice Arbour noted:
- The policy grounds
for supporting abuse of process by re-litigation have been identified as:
to put an end to litigation, to ensure no one is twice vexed by the same
cause, to preserve the courts’ and litigants’ resources, to uphold the
integrity of the legal system, to avoid inconsistent results, and to protect
the principle of finality (C.U.P.E., above, at para. 38) (Emphasis added).
- The
doctrine of abuse of process applies regardless of whether it is the
plaintiff or the defendant who has initiated the re-litigation (C.U.P.E., above at para.
47).
- The motive of the
party seeking to re-litigate is not the focus of the doctrine of abuse of
process by re-litigation (C.U.P.E., above at paras. 46, 51).
[68] Justice Arbour also noted that the primary
concern of the doctrine of abuse of process is the integrity of the
adjudicative process. In this respect, the Justice made the following
observations:
First,
there can be no assumption that relitigation will yield a more accurate result
than the original proceeding. Second, if the same result is reached in the
subsequent proceeding, the relitigation will prove to have been a waste of
judicial resources as well as an unnecessary expense for the parties and
possibly an additional hardship for some witnesses. Finally, if the result in
the subsequent proceeding is different from the conclusion reached in the first
on the very same issue, the inconsistency, in and of itself, will undermine the
credibility of the entire judicial process, thereby diminishing its authority,
its credibility and its aim of finality (C.U.P.E.,
above at para. 51).
[69] Finally, Justice Arbour
identified several instances where re-litigation enhances, rather than detracts
from, the integrity of the judicial system:
- When
the first proceeding is tainted by fraud or dishonesty.
- When
fresh, new evidence, previously unavailable, conclusively impeaches the
original results.
- When
fairness dictates that the original result should not be binding in the
new context.
- When
there was an inadequate incentive to defend in the first proceeding (C.U.P.E., above at paras.
52-53).
6.1 Do the Defendants’ allegations amount to
re-litigation that constitutes an abuse of process?
[70] At issue in this motion is the Order of
Justice Nadon. It was an Order issued on consent following a settlement among
Adir, Hoescht and Schering and, according to the Defendants, cannot be binding
on anyone other those three parties.
[71] In general terms, the
jurisprudence establishes the following principles with respect to consent
orders and judgments:
- A
consent judgment is a final determination by the Court of the rights and
obligations of the parties. It is a judgment of the Court and not the
parties. The fact that the judgment was consented to makes it no less
valid and subsisting (Bank of Montreal v. Coopers Lybrand Inc.
(1996), 137 D.L.R. (4th) 441 (Sask. C.A.)).
- A
consent judgment has no precedential value. It reflects neither findings
of fact nor a considered application of law to the facts by the court (Uppal
v. Canada (Minister of Employment and Immigration), [1987] 3 F.C. 565
(F.C.A.), Armstrong v. Canada, [1996] F.C.J. No. 599 (F.C.A.)).
[72] The first question that
must be answered in the analysis is whether the first proceeding(s) decided the
issue that is being litigated in the second proceeding. If not, no
re-litigation, and hence no abuse of process by re-litigation, can be said to
have occurred.
[73] I look first to what is
being decided in conflict proceedings. These proceedings are limited to
deciding the issue of priority among the parties to the conflict. They do not
decide the issue of the validity of the patent (Nekooska, above at 157-8) except
among the parties to the conflict proceedings (Sherritt Gordon Mines,
Ltd., Forward and Odle v. Downes and Berry (1962), 40 C.P.R. 108). In the
present case, the Defendants’ validity allegations are limited to the parties
of Justice Nadon’s Consent Order of December 12, 2000. Although the Defendants
characterize this as an attempt to determine “inventorship at large”, this is
not reflected in their pleadings. By limiting their allegations to Schering and
(possibly) Hoechst, two of the named parties to the Consent Order, the
Defendants are, in effect, arguing that the priority of the parties to the
Consent Order of December 12, 2000 was decided incorrectly. As this issue is
exactly what was decided by Justice Nadon’s Consent Order of December 12, 2000,
the Defendant’s allegations of inventorship in their Defence and Counterclaim
can be characterized as re-litigation of an issue that has already been finally
determined by an Order of this Court.
[74] While I agree that the Order
of Justice Nadon was directed only to the parties to the litigation, we must
not lose sight of the purpose and consequences of the conflict proceedings. The
Order provided the framework within which a number of patents were issued.
Pursuant to the Old Act, the rights of the patent holders extended
beyond the parties to the litigation. Rather, the consequence of the Order was
the issuance of patents that can be enforced against all third parties
and not just Adir, Hoechst and Schering.
[75] Having established the
present case involves re-litigation, the second question that must be answered
is whether the re-litigation amounts to an abuse of process.
[76] Factors that support a
finding an abuse of process are:
- The
relitigation of the inventorship claims will require an expenditure of the
litigants’ and the courts’ resources years after the issue was resolved by
the Consent Order of December 12, 2000.
- Re-litigation
would not respect the importance of finality and predictability to the
patent system (Free World Trust, above, at paras. 41-43).
[77] Factors that are against
finding an abuse of process are:
- The
Defendants were not a party to the previous conflict proceedings.
- The
Order of Justice Nadon of December 12, 2000, was not litigated in the Federal
Court but by the parties but was made on consent; a more complete
evidentiary record would not impair the integrity of the courts.
- The
Minutes of Settlement put before Justice Nadon are potentially misleading
as to the issue of inventorship.
[78] Generally, the primary
concern of the abuse of process doctrine is the integrity of the adjudicative
process (C.U.P.E., above at para. 51). However, the integrity of a
particular adjudicative process depends on its context. In the patent context,
for example, finality is critical (Free World Trust, above at paras.
41-43). If
an order determines the priority of conflicting claims, and a party is
subsequently allowed to question that order, the value of the patent, and more
importantly the value of the conflict procedures in the Old Act, would
be undermined. Fairness to the patent system in such a context dictates that
such questioning be prevented.
[79] It should be noted, in
the present case, that, although the order was made on consent, it is of no
less value (Bank
of Montreal, above). The Defendants
are attacking the substance of Justice Nadon’s Consent Order itself and are not
merely claiming that it has no precedential value in law. Therefore, in my
view, the Defendants’ inventorship allegations amount to an abuse of process
and should be struck.
[80] Finally I note that an
attack on the Order of Justice Nadon could have been made by the Defendants in
other ways. Three possible avenues of attack that were described in Bank of
Montreal, above, at p. 447 are:
- By an application
to the Court to vary its judgment;
- By appeal; or
- By a separate
action to set aside the judgment on the basis it was obtained by fraud.
[81] If, for some reason, the
Defendants are unable or unwilling to undertake a direct attack on the issues
finally determined by the Order of Justice Nadon, they should not be permitted
to do so in the context of this action. Seen through this lens, what the
Defendants are attempting is a collateral attack on the Order in question. The
same considerations come into play; the collateral attack should not be
permitted.
6.2
Conclusion on this issue
[82] For the foregoing reasons, I
conclude that the impugned provisions in the Defence and Counterclaim should be
struck on the ground that they are an abuse of process of the Court.
7. Summary
[83] In this motion, the
Plaintiffs have satisfied their burden to demonstrate that the impugned
provisions of the Defence and Counterclaim should be struck on the basis that:
a)
they disclose no reasonable cause of action; or
b)
pursuit of the counterclaim on the basis of the
issue of inventorship would be an abuse of process of the Court.
[84] Given my conclusions and
reasons, leave to amend the impugned provisions would be a waste of time and
judicial resources. Having said this, however, should the Defendants convince
the Court that a patent application other than the 336 Application was not put
into conflict and was a prior known invention, the Court would consider the
circumstances of that alleged “missed conflict” and whether the Defendants
should be allowed to amend their pleadings accordingly. This decision does not
address that situation.
[85] The Plaintiffs seek the costs
of this motion. As mentioned earlier in these reasons, the timing of this
motion is a matter of concern. The Plaintiffs have known that the issue of
inventorship was in play and have known that they would raise s. 61(1)(b) of
the Old Act in response and, in fact, pleaded the material facts and
elements of that argument. By not bringing this motion earlier, all parties
have expended considerable effort addressing the inventorship issue. The
reasons provided by the Plaintiffs for the delay are simply not impressive.
Accordingly, I will exercise my discretion and decline to award costs; each
party will bear its own costs of this motion.
ORDER
THIS COURT ORDERS that:
1. The motion is
granted;
2. The following
portions of the Defendants’ Second Amended Statement of Defence and
Counterclaim
are struck, without leave to amend:
(a) the statement “in order
to themselves “create” the inventorship of the subject-matter of
the
Agreement” in paragraph 26 of the Defence and Counterclaim;
(b) paragraphs 48 to
54 of the Defence and Counterclaim;
(c) paragraph 65 of
the Defence and Counterclaim;
(d) paragraph 68 of
the Defence and Counterclaim; and
(e) the
statement “and allocate among themselves overlapping claims to a number of ACE
inhibitor compounds that did not reflect the actual inventorship of those
compounds or their constituent classes, or the determinations of inventorship
made by the Commissioner of Patents in 1996” in paragraph 71 of the Defence and
Counterclaim.
3. There
will be no award of costs.
“Judith
A. Snider”
__________________________
Judge
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